SAN FRANCISCO -- A notorious former gangster has taken over a Chinatown street market that is financed by San Francisco taxpayers, a development that has set off alarm bells at City Hall.

Raymond "Shrimp Boy" Chow - who was once sentenced to 25 years in prison on gun charges but says he's gone legit - was named manager of the Chinatown Night Market on Friday by the Chinatown Neighborhood Association, a group with close City Hall ties.

The potential embarrassment of Chow's involvement, we're told, prompted a contentious closed-door debate about the city's $35,000 grant to the program - with Board of Supervisors President David Chiu cautioning against the deal, Mayor Gavin Newsom's staff largely noncommittal, and Planning Commissioner Bill Lee arguing to move ahead.

"The mayor wants the whole deal closely scrutinized," mayoral spokesman Nathan Ballard said Tuesday after news of the controversy spread.

It is unclear, however, whether the city can do anything about Chow or the $35,000 - which the city awarded in a contract it signed with the market's sponsors in December.

The summertime market, where vendors pay a fee to sell their wares in street booths, has been operated since its founding a decade ago by the Chinatown Neighborhood Association, led by two longtime city pols, former Police Commissioner Pius Lee and ex-Redevelopment Commissioner Benny Yee.

Critics have complained that much of the taxpayers' yearly $35,000 contribution to the event has not been accounted for - a charge that was largely confirmed by a city controller's audit two years ago that recommended pulling the plug on the public funding.

Last week, Lee and Yee called a Chinatown news conference to say they were stepping away from the neighborhood association to pave the way for the group's reorganization. They said six of the association's 19 board members would be members of the Chee Kung Tong, or Chinese Freemasons - with Chow, head of the group, serving as the market's new general manager.

Pius Lee said there was nothing wrong with the handoff, that no one else wanted the job and that critics are simply jealous political opponents who "want to ruin the market."

Chiu, however, said he questions how much popular support the market has and urged the city to suspend its involvement until a better management plan can be worked out.

"Given the budget crisis, given the long history and difficulties of this night market and given the new players involved, I think it raises serious questions," he said.

Chow's new job as night outdoor market manager is the latest twist in a long and colorful career.

In 1992, the Hong Kong-born Chow, then active in the Hop Sing Tong, was indicted with two dozen others on racketeering charges for their alleged involvement in everything from underage prostitution to the international heroin trade.

Chow was subsequently convicted of gun charges and sentenced to 25 years. In 2003, however, he was released after he cut a deal with the government to testify against a high-ranking associate.

Three years ago, Chow came under scrutiny from law enforcement after Freemasons leader Allen Leung was shot to death by a masked gunman in his import-export business on Jackson Street. No one was ever arrested in the killing.

The feds have since tried to deport Chow to China.

Chow tells us he has cleaned up his life, and now speaks to high schools and college classes about the perils of gang membership.

He can even point to a City Hall proclamation he received in 2006 from then-Supervisor (now state Assemblywoman) Fiona Ma for his community work.

But because of his uncertain immigration status, Chow said, he hasn't been able to get a regular job and relies largely on the generosity of his family.

As far as the market goes, Chow said he had volunteered to accept just $1 in pay - and has urged that the rest of the city money be spent on young people working at the market.

"Nobody can change the past," he said. "But I can change today and my future."

This article has been corrected since it appeared in print editions.

Chronicle columnists Phillip Matier and Andrew Ross appear Sundays, Mondays and Wednesdays. Phil can be seen on CBS-5 morning and evening news. He can also be heard on KCBS radio Monday through Friday at 7:50 a.m. and 5:50 p.m. Got a tip? Call them at (415) 777-8815 or drop them an e-mail at matierandross@sfchronicle.com.

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